Minnesota Real Estate Investors Association, Inc.

Real estate is changing at an ever increasing pace.  A few years ago, you were hard pressed to find an abundant supply of Bank REO’s on the market.  Short sales were the rave and houses were still selling so most potential foreclosures were either going through a short sale or were sold before the banks got possession through foreclosure.

Then last year the banks all but stopped accepting short sales and the number of new foreclosure filings started to increase at record paces.  This caused a flood of foreclosures reaching the banks REO department and our focus shifted to finding good, no great deals by searching the MLS for bank REO’s.  We were able to acquire great deals on foreclosures and rehab them for resale.

Then last fall there were so many foreclosures that we were no longer able to resell the properties retail so the new focus became acquiring these bank REO’s for rentals.  This was a good strategy for many because we could buy the properties cheap and rents remained high.  This gave investors good cash flow.  And that is something we haven’t seen in many years.

Recently though we have been experiencing something quite different.  With all the foreclosures on the market, everyone wants in on the good deals.  That includes first time home buyers who have a huge advantage over investors.  Their 1st advantage is that they can get an FHA loan which only requires a 3% down payment compared to the 30% investors must put down. Their 2nd advantage is that they get an $8,000 tax credit just for buying.  Their 3rd advantage is that they qualify for the numerous first time home buyer rehab loans available through most cities and charitable organizations.
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According to the Minneapolis Association of Realtors

“Foreclosures and short sales are showing early signs of slowing. During the fourth quarter of 2008, there were 4.3 percent fewer new lender-mediated listings than in the third quarter. That's the first quarter-to-quarter decrease since 2003.”

The association has released a new interactive data tool that allows you to sort neighborhoods and cities within the Minneapolis/Saint Paul region. You can find it here: www.mplsrealtor.com/downloads/market/Lender-Mediated/Main.htm

While the signs look like positive, don’t think we are out of the water just yet, many analyst are still saying that the next wave of foreclosures is coming between 2009-2011 with all the Conventional Option ARM loans that are set to start adjusting in right now.

If you are in the Short Sale Business, then you will be busy for a very long time and buyers will be getting some very good deals over the next few years. I was just thinking that when this next wave of foreclosures hits, the lenders will be more p
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We know that the Emergency Economic Stabilization Act of 2008 otherwise known as the $700 Billion dollar bailout bill was never intended to buy up the defaulted loans that the banks are holding onto, right?  And we also know that the bailout bill has increased to several trillion dollars, that’s Trillion with a “T”.  But what about the bad loans on the banks books, wasn’t that the purpose of the bailout bill in the first place?  Well yes, originally it was.  Do you remember the original 3 page bailout bill that President George Bush proposed, but was voted down?  The finally bailout bill that was passed one week later was 450 pages long and they must have excluded the 3 original pages which was supposed to direct the bailout to buy up all those bad notes that the banks were holding.

It boggles the mind to see what is happening with all that money that we the tax payer is going to have to pay for, for many generations to come.  There is a few extremely large banks getting the money, but they aren’t even using it to cover the bad debt that they have on the books, they are using it to buy other banks with very little bad debt.  Basically what we are doing with the money right now is giving it to the biggest financial institutions and telling them to use that money to buy smaller companies that weren’t reckl
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